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Commodities Briefing 22.Dec 2011

Posted on 22 December 2011 by VRS |  Email |Print

Patricia MohrPrices for key Canadian commodities will likely end the year only slightly above where they started, Scotiabank reported Wednesday in releasing its Commodity Price Index.
Despite that flat reading, the year did have its star performers, in the form of sulphur - the No. 1 commodity for the second year running, having gained 43.1 per cent in 2011 - as well as coking coal, which climbed 36.4 per cent, potash, up 31.9 per cent, hogs, up 26.9 per cent and cattle, up 21.5 per cent………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Charlie MorrisNew Year rallies have become so commonplace for commodities that fund managers have almost come to expect them. Not this year.
Commodities indexes, metals and many other raw materials have seen big losses in 2011 and many investors say the prospect of another year of slack global growth is likely to keep them in cash and other safe havens for some time to come………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Commodities and the emerging markets have been highlighted as good places to invest in the coming year by BNY Mellon Asset Management. The two sectors are offering pockets of opportunities for investors during the coming 12 months, with the BNY Mellon Investment Outlook for 2012 highlighting the best options for investors.
The outlook is a compendium of distinctive views from BNY Mellon Asset Management’s specialist boutiques across asset classes and regions. The outlook notes that developed market challenges such as the eurozone crisis and the U.S. budget deficit continue to cast a cloud over the investment horizon. However, astute investors may be able to take advantage of market dislocations and trends that are beginning to develop (Press Release)

Posted on 22 December 2011 by VRS |  Email |Print

In January 2012 the world’s two most followed commodity benchmarks, the DJ-UBS All Commodities Index and the S&P GSCI Index, will go through their annual rebalancing. The impact on investor flows across underlying commodity futures can be quite significant as the 2012 rebalancing has an added twist, with Brent crude oil being added to the Dow Jones-UBS Commodity Index for the first time and WTI oil seeing its weight reduced.
According to ETF Securities, theoretically, any potential impact should already be digested and reflected in the underlying commodity futures prices………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Silver and Gold will likely suffer a setback this month but eventually prices may be hitting $34 and $2,000/oz respectively in 2012. Meanwhile, Platinum is likely to touch 1500/oz, said a report from Bank of America Merrill Lynch (BofAML).
Given the deteriorating outlook for global growth, BofAML is cautious on adding commodity risk. However, an upcoming recession in Europe has increased the likelihood of additional easing from the Fed, the European Central Bank and the Bank of Japan. It has also pushed back market expectations for the timing of the first interest rate hikes across Developed Markets central banks………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Majority among gold miners see the precious metal to hit $2000 at some where next year,according to a PricewaterhouseCoopers survey. The survey said miners are raising dividends and looking for takeover deals with expectations the price of gold will head even higher next year.
John Gravelle, the Canadian mining leader at PwC, says the shares of gold companies haven’t increased as much as the price of gold, so they’re facing increased competition for investors’ dollars………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

With just a few trading days left in 2011, we can take stock of gold’s performance vis-à-vis other assets. Gold is 13.7% higher in USD, 12% higher in GBP and 14.4% higher in EUR. Gains were seen in all fiat currencies and even stronger performing fiat currencies such as the CNY (yuan) and JPY (+9% and +8.75% respectively).
While gold reached record nominal highs at $1,915/oz in August, it is important to continually emphasize that gold remains well below the real high, adjusted for inflation, in 1980 of $2,500/oz………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

If you’re around my age, then you probably remember exactly where you were when you heard the news in November 1963 that President Kennedy had been shot. The first lunar landing in July 1969 is another such time marker for my generation, as is Sept. 11, 2001.
Jan. 21, 1980, on the other hand, is probably notable only to the extreme financial market aficionados among us. That’s the day the price of silver peaked at an intraday high of a record $50.35 per ounce, or about $140 an ounce in today’s (inflation-adjusted) dollars — more than four times the current price………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

The top picks for investors going into 2012 should be oil and copper, a commodity price expert said Wednesday. Both commodities will remain strong throughout the New Year, said Patricia Mohr, vice-president, economics and commodity market specialist at Scotiabank.
Demand is growing for copper, which is mined in B.C. by several companies. Copper is used in motor vehicles, power generation, equipment and household appliances like TVs and refrigerators. The emerging markets, particularly China, are driving demand, and Mohr expects that to remain strong as China further eases its monetary policy, a move that she expects soon………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Brent crude will average $105 (U.S.) a barrel next year, not far below this year’s record high average near $111, a Reuters poll found. A quarter of analysts have reduced their forecasts since a similar poll a month ago because of worries about the impact of the euro zone debt crisis on economic growth.
But respondents think oil will remain expensive because of worries about supplies from producers Iraq and Kazakhstan and the possibility that tighter sanctions could curb Iranian oil sales. Low crude stocks and strong diesel demand also are supporting prices………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

A surge in oil prices and output will likely lift OPEC’s crude export earnings this year to their highest level since the cartel was created 51 years ago, according to projections by a key western energy studies centre.
At $899 billion in 2011, the combined revenue of the 12-nation Organization of Petroleum Exporting Countries will be $249 billion above the 2010 income of around $650 billion and about $381 billion over the 2009 earnings of $518 billion………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

The Standard & Poor’s GSCI gauge of 24 commodities rose 1 percent to close at 640.91 at 3:47 p.m. in New York, led by corn, wheat and cattle. The UBS Bloomberg CMCI index of 26 raw materials climbed 0.6 percent to 1,509.6.
Crude oil rose for the third straight day after weekly U.S. inventories declined the most in a decade. The Energy Department reported supplies fell 10.6 million barrels last week to 323.6 million………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Iraq is expected to account for as much as 80 percent of the anticipated production increase from OPEC members, the IEA estimates.
The International Energy Agency in its latest monthly oil report estimates crude oil production from Iraq is on pace to increase 1.87 million barrels per day from 2010-16. This means that by the end of the timeframe, Iraq will produce on average 4.36 million bpd………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

According to data from Kitco, gold started the year around $1,400 per ounce, and is currently trading at just over $1,600 per ounce. Silver, on the other hand, started the year at $30.70 per ounce, and now trades a tad lower in the $29.50-per-ounce range. It was what silver did during the year that made all the headlines.
Back in April, it hit a high of $48.70 per ounce. The scale and speed of the decline after the April high suggested institutional dumping of the metal. Prior to the sell-off, silver was widely viewed as another safe haven (like gold) against money printing………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Speculation, though an integral part of commodity derivative trading, needs to be kept within limits and increasing participation of hedgers would automatically ensure that, said Forward Markets Commission Chairman Mr Ramesh Abhishek.
When the proportion of hedgers in a contract increases sharp speculative swings can be kept within limits. “We have asked exchanges to promote hedging tools available with them to bring in more hedgers on as participants,” Abhishek said………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

With inflation pressures waxing and waning many believe it’s important to have portfolio exposure to a basket of commodity ETFs. Why? Commodity markets often feature non-correlated performance with conventional portfolios. Further, given easy money policies which began in 2008 has hurt the value of the dollar.
Since most commodities are priced in dollars, this puts upward pressure on prices which can become inflationary. We’ve cobbled some good choices of commodity tracking ETFs and ETNs where repetitive choices may exist but leave it to investors to pick the ones that suit them best………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Confidence is what gives currencies their credibility. The U.S. dollar went off the gold standard with the Bretton Woods’s agreement during the Nixon administration since more dollars were being printed than there was gold to back them (55% to 22%).
Taking the U.S. off the gold standard with the BW agreement made the dollar the world’s reserve currency. This meant many commodities were priced in dollars. Some currencies were permitted to float freely while others maintained a “currency peg” to the dollar. As of late 2011 the U.S. Dollar is still nearly 70% of foreign reserve holdings………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Last week saw a severe breakdown in the Precious Metals sector that is now viewed as marking the start of a bearmarket, and that means the onset of a deflationary episode that is likely to prove more serious than that we witnessed in 2008, because it will involve countries going bust rather than “just” banks and large corporations as was the case in 2008.
At first glance gold’s 3-year chart still doesn’t look too bad, with its price in the vicinity of a still rising 200-day moving average, but last week it broke below this average for the first time since 2008, which is in itself a serious warning, and ominous developments on the charts for Silver and the Precious Metals stocks indices……………………………………….Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

So 2012 will mark the fifth anniversary of the global financial crisis. There’s little reason to think it’s reached its end yet. Merry Christmas.
Banking and household leverage in the rich West has barely ticked lower from the credit bubble’s historic peak of 2007. Financial leverage has only been reduced by a fraction, while governments have been stuffed like a French goose with that new debt spurned by the private sector since 2008………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

The lira, the second-worst performing currency after South Africa’s rand this year, will lead global gains in the first half of 2012 as Turkey pares its record current-account deficit, according to the median of estimates from more than 20 banks on Bloomberg.
The lira is set to rally 4.4 percent by the end of June for the biggest gain against the dollar among 33 global currencies ranked by Bloomberg, the survey shows. The lira will be the first to benefit from a revival of risk appetite as the European debt crisis is expected to be resolved by March, Benoit Anne, chief emerging-market strategist at Societe Generale SA in London, said in e-mailed comments………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Iran’s currency, the rial, tumbled in value to its lowest level ever against the dollar on Tuesday in panic selling caused in part by the country’s increased economic isolation from international sanctions, an unbridled inflation problem and worries that government officials there are ideologically incapable of devising a workable solution.
The rial’s value has been weakening for months, but the traumatic drop on Tuesday reflected what Iranian economists called a new level of economic anxiety in the country, exacerbated by conflicting information coming out of the Tehran hierarchy that reinforced a sense of indecision and confusion………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

Farmers will reap a record corn crop for a sixth consecutive season in 2012, slowing a slump in stockpiles of livestock feed as global meat demand approaches a quarter of a billion metric tons.
Production will rise 4.8 percent to 867.5 million metric tons in 2011-12, curbing the drop in inventories to 0.8 percent, the smallest decline in three years, the U.S. Department of Agriculture estimates………………………………………..Full Article: Source

Posted on 22 December 2011 by VRS |  Email |Print

The European Union’s top court backed the inclusion of the airline industry in the bloc’s carbon-trading market Wednesday in a decision that is likely to stir up an escalating diplomatic row between the EU and its biggest trading partners.
The widely expected ruling comes as the U.S. and others intensify pressure on the EU to delay the expansion of its emissions trading scheme to airlines on Jan. 1, or scrap it altogether in favor of a new international deal………………………………………..Full Article: Source

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